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Better educated parents invest more time and
money in their children, who are more successful in the labor market

Elevator pitch

Governments invest a lot of money in education,
so it is important to understand the benefits of this spending. One
essential aspect is that education can potentially make people better
parents and thus improve the educational and employment outcomes of their
children. Interventions that encourage the educational attainment of
children from poorer families will reduce inequality in current and future
generations. In addition to purely formal education, much less expensive
interventions to improve parenting skills, such as parental involvement
programs in schools, may also improve child development.

Key findings

Pros

The
fact that better educated parents produce children who also do
better implies that the benefits of policies to raise
educational attainment are greater than previously
estimated.

Simple measures to improve parenting skills can be effective
and inexpensive—and be aimed at parents most in need of
help.

Interventions that encourage the educational attainment of
children from poorer families will reduce inequality in current
and future generations.

The
estimated payback from successful interventions in educational
policy is greater if the focus is not only on the generation or
groups directly affected.

Cons

The
fact that children of better educated parents do better than
children of less educated parents reduces social mobility across
generations.

Some
studies fail to find much evidence that expansions of education
for one generation affect outcomes in the next
generation.

Information is limited on returns to different types of
schooling.

Estimates are conflicting on the relative importance of
maternal and paternal education.

Little is known about the effects of expanding the educational
system on intergenerational mobility.

Author's main message

There is a positive intergenerational return to
human capital, but it tends to be larger in countries where education
significantly increases earnings. The main policy relevance is that the
benefits to society of measures that increase education are greater than if
they were confined to the directly affected cohorts. Policy interventions
that predominantly encourage the educational attainment of children from
poorer families will reduce inequality in both the current and future
generations.

Motivation

College-educated parents in the US spend more
time caring for their children than parents with less than a high school
diploma, even though they work longer hours, their time has higher value,
and they can better afford childcare. In general, better educated parents
invest more in their children, and their children do better in the labor
market.

Better educated parents tend to earn more, live
in better neighborhoods, have healthier lifestyles, and raise stronger and
healthier children who do better in life than the children of less
well-educated parents. This suggests that measures to improve the education
of one generation will provide benefits to future generations.

Although this intergenerational relationship is
well-established, linking the effects of better parental education in a
causal way to child outcomes is challenging. Clearly, identifying such
causal links is important for making policy recommendations.

Without thoroughly accounting for all the
differences between the types of people who attain high education and those
who do not, it is difficult to ascertain what effect their education has on
their own lives and, subsequently, on their children’s. In practice, it is
not generally feasible to take all these differences into account, as many
are unobserved, or difficult or impossible to measure. Economists have to
get past these difficulties and use innovative approaches to measure the
actual causal effects of parental education on child outcomes.

Discussion of pros and cons

Direct evidence from changes in
education policy

A natural starting point to study policy
effects is to examine the intergenerational effects of policy changes
that increased parental education. A good example comes from Norway,
where an educational expansion in the 1960s was implemented in different
municipalities at different times [1]. The policy change studied was
an increase in compulsory education from seven to nine years. To
understand the authors’ approach, note that some women born in the same
year (1950 for example) would have had to complete nine years of
compulsory schooling (because their municipality implemented the reform
early) but that others would only have completed seven (because theirs
implemented it later). Likewise, among women who grew up in the same
municipality, some would have completed nine years of schooling rather
than seven because they were born a little bit later and were subject to
the stricter law.

So, the staggered implementation of the
change led to otherwise similar women having different levels of
education. The authors investigate whether these differences in maternal
education translate into differences in the education completed by their
children. They also carry out the equivalent exercises for paternal
education. They find that the length of a mother's education does affect
her children's educational attainment (especially for sons), but that
there is little such evidence for the father's education (Illustration).

Similar analyses have been carried out for
compulsory schooling changes in Sweden [2] and the US [3]. The results for Sweden are
similar to those for Norway. Interestingly, the US evidence suggests
that both paternal and maternal education matter and that higher
parental education is associated with a lower probability of a child
repeating a grade in school. The US effects are larger than those in
Scandinavia. One plausible interpretation is that it is related to the
higher return to education in the US and the greater availability of
high-quality publicly funded education in Norway and Sweden.

Related work found that a large school
building program in Indonesia led to increases in education for affected
cohorts but also to improved test scores for children of women (but not
men) affected by the policy [4].

Evidence from parental deaths

Researchers studied a sample of Israeli
families in which one parent died while the children were growing up
[5]. They found that if one parent
died before the child was 18, the effect of that parent's education on
child school performance was lessened and the effect of the surviving
parent's education increased. Moreover, the more years a parent was
present in the child's life before dying, the greater the effect of that
parent's education on the child's test score. This makes intuitive
sense: if education causes parents to be more effective, the effect of a
parent's education should be greater if they are able to spend more time
with their child. Similar effects are found for cases where children
lose contact with their father due to divorce. These results strongly
suggest that parental education contributes to higher test scores of
children, and thus there is an intergenerational return to education.
The findings from Israel have been corroborated by a study using
Norwegian data [6].

Evidence from adoptees and twins

Clearly, a principal reason for
intergenerational correlation is genetic transmission of abilities or
characteristics from parents to children (such as attitudes toward risk
or willingness to delay gratification). Therefore, researchers have used
methods that seek to purge the genetic factors from the connections
between parental education and child outcomes. Two approaches of this
nature involve using adoptees or twins.

Adoptees

When children are adopted, they move from
one family to another, and the importance of parental education can
be studied using such cases by seeing whether how adopted children
fare is affected by the education of their adoptive parents. A
Swedish study examined how various child outcomes depend on the
educational levels of both the biological and adoptive parents using
a detailed administrative data set [7]. It finds that the effects
of paternal education on the educational outcomes of children are
similar in size for both biological and adoptive fathers. But the
education of biological mothers has a bigger effect on the completed
educational attainment of the child than does the education of
adoptive mothers. However, the education of adoptive fathers has a
larger impact than that of biological fathers on earnings and
income. These positive effects of adoptive parents suggest that
environmental factors are important, and that having better educated
adoptive parents has a beneficial effect on children that translates
into better employment outcomes.

Twins

Another approach is to study the children
of mothers who are identical twins. Since monozygotic twins are
considered genetically identical, it may be a fairly random matter
whether one twin ends up with a higher level of education than the
other twin. (This assumption is, however, questionable, as there is
evidence that educational differences between identical twins are
correlated with other characteristics, such as birth weight.) It is
thus informative to see whether the twin with the better education
produces children who also have better education and employment
outcomes. Using this methodology, economists have found positive
effects of parental education. This is consistent with an
intergenerational return to the extra education of the better
educated twin.

Evidence from pre-school

While most research has studied schooling,
recent work has looked at the intergenerational effects of
pre-schooling. A US study of the Perry Preschool Project uses a
randomized experiment to show that the children of pre-school
participants have, as adults, higher levels of education and employment
as well as other beneficial outcomes [8]. A non-experimental study
using Danish data shows that mothers that have access to pre-school have
children with greater educational attainment. Overall, this research
suggests that pre-school programs lead to benefits for future
generations as well as direct participants.

Evidence from other sources

Other research has used different sources of
variation in parental education to examine intergenerational returns. A
2008 study uses the increase in university admissions that followed on
from the student riots of May 1968 in Paris [9]. One immediate result of the
riots was that students were able to negotiate more lenient passing
grades for the baccalauréat (which, if
successfully completed, guarantees access to university) for that year.
The proportion of students who passed increased significantly that year,
so more students qualified to attend university. Moreover, these
educational gains were passed on to the next generation: grade
repetition declined significantly for the children of the affected
cohort. Another study finds that exposure to radiation while in utero
leads to lower cognitive skills and education levels for affected
cohorts; the children of those exposed subsequently also have lower
cognitive skills, suggesting an intergenerational return to human
capital.

Is the mother's or father's education
more important?

Much is still not known about the relative
importance of mother's and father's education, but research has
unearthed some suggestive patterns. Adoptive parents tend to have higher
than average education, and adoption studies typically find that
paternal education is more important than maternal. But studies that use
changes in compulsory schooling laws or school building interventions as
a source of variation tend to find the mother's education to be more
important. Of course, compulsory schooling laws affect only people with
low levels of education. Studies of twins tend to find that the mother's
education is more important when the sample is restricted to twin
mothers with low education. To complicate matters, data from Sweden show
that these differences between findings from twin, adoptee, and
compulsory schooling strategies are the result of differences in the
methods used rather than the country studied [2].

Overall, the literature suggests that extra
maternal education is particularly important when mothers have low
education, but that extra paternal education is more important when
fathers already have a fairly high educational level. The differences
here are probably related to the differing roles played by mothers and
fathers in family life and the labor market.

Why might there be intergenerational
returns to education?

There are many mechanisms for parental
education to operate intergenerationally. Considered here are birth
endowments, parental investment, and other environmental influences.

Birth endowments

When people have more education, it tends
to influence when and whom they marry, when they have children, and
how many children they have. Most research finds that better
educated women postpone childbearing and usually have fewer
children. They are also more likely to marry a highly educated man.
This means better educated mothers are more likely to produce
children with good prospects from the outset—good, so-called, “birth
endowments.”

Another mechanism is that parental
schooling may increase skills or knowledge relevant to the
well-being and capabilities of a child. Well educated parents tend
to be more aware of the value of good health habits and preventative
care and have greater knowledge of good parenting traits. This is
important when the child is young—and even before birth, because
better educated mothers are less likely to smoke during pregnancy
and to have low birth-weight children, relevant because infant
health is a strong predictor of later outcomes, such as completed
education, cognitive test scores, and earnings.

Some policy-related evidence for the
effect of education on infant health comes from a 2011 US study
using data from California and Texas to compare women born just
before and just after school-entry dates [10]. The second group starts
school a year later and ends up, on average, with a poorer
education. The authors find little evidence that the difference in
the education of these mothers affects the birth weight of their
children.

Another study also using US data exploits
the fact that as tertiary-level colleges opened around the country
some women happened to be in a late enough cohort to attend a local
college, while other women from the same county were too old by the
time a college opened [11]. This created
variation in college attendance uncorrelated with personal
characteristics. The study finds that a higher level of maternal
education reduces the probability that a child has a low birth
weight. The contrasting results between these two studies of,
respectively, school [10] and college
[11] education in the US
suggest that a compulsory increase in the length of secondary
schooling may have little effect on birth outcomes, but policies
that increase access to college may have positive effects.

Parents’ investment in
their children

Parents may invest in their children for
altruistic reasons (they want them to do well in life), and they see
enhanced abilities as a way to achieve this. They may also invest
for selfish reasons: they want their children to provide income or
other support to them (the parents) once they have grown up.
Education itself may lead to a change in preferences or attitudes.
For example, better educated parents may want to spend more time
with their children and be more willing to sacrifice their own
consumption in order to invest in them.

It is possible that well educated parents
would invest more in their children because the return from doing so
would be perceived as higher. For example, if parents have better
academic skills, an extra hour spent helping a child with homework
may be more productive than for less well-educated parents. But it
is not clear that the return is necessarily higher for better
educated parents, as their children may have more human capital in
the first place, and the return to parental effort might be expected
to be higher for a child with less human capital—one from a less
educated family. Research suggests that the returns to investments
early in life may be particularly high for disadvantaged
children.

It is no surprise that better educated
parents invest more in their children financially: on average, they
have higher incomes. But better educated parents also spend more
time with their children. A study using the American Time Use Survey
for 2003–2006 shows that college-educated women spend over four
hours more per week interacting with their children than women with
less education than a high school diploma, despite the fact that, on
average, the college-educated work longer hours and have fewer
children [12]. Similarly, men with
college degrees spend significantly more time providing childcare
than men without a high school diploma. The authors also present
evidence from several other countries that, in general, better
educated mothers spend more time caring for their children than less
educated mothers.

One drawback of this survey is that the
authors are unable to fully take into account the fact that parental
education may be correlated with many unobserved characteristics of
the parents [12]. For example, more
motivated or more patient parents may be more likely to acquire
higher levels of education and these traits may be passed on
genetically to their children and have direct effects on child human
capital accumulation. Another US study uses the variation in
parental education that arises from differences in the availability
of college education in the mother's county when she was growing up,
variation in college tuition fees, and variation in labor market
conditions when the mother was considering going to college [13].

Educational differences that arise
because of these factors are likely to be unrelated to other
characteristics of the mother. When the authors allow for these
sources of variation in maternal education, they still find that
better educated mothers tend to invest more time in their children.
For example, they are more likely to read to their children at least
three times a week. Thus, the evidence that maternal education
increases investment in children in the US appears to be robust.

Other environmental
influences

Even if parents do not specifically
invest in their children, the children of better educated parents
are likely to benefit from a richer environment when growing up. In
the study mentioned above, better educated mothers are more likely
to have a computer or musical instrument in the house [13]. And the children may
live in nicer areas, go to better schools, and be fed more wholesome
foods. They are more likely to mix with peers who are ambitious and
to make contacts that will help them find employment later in
life.

Evidence from interventions in
parenting

Policies that increase or improve education
may have positive effects on the next generation but are generally
expensive. So, it is interesting to consider less costly interventions
that increase the human capital of parents in ways directly targeted at
their children's outcomes. These include programs to increase parenting
skills immediately before and after the birth of a child, such as the
Irish “Preparing for Life” program that uses home visits to provide
advice and support to mothers in a deprived Dublin community from
pregnancy to when the child is five years old. An evaluation of this
program shows large positive effects on the cognitive skills of children
at age five, indicating that this type of home-visiting scheme can have
positive effects on early childhood development and child human capital
accumulation [14].

Other programs help parents support their
children through school. One example is an intervention in French middle
schools in a relatively disadvantaged part of Paris [15]. In each participating
school, about half the sixth-grade classes (students are around age 11)
were randomly allocated to the treatment, which consisted of three
meetings of parents with the school principal where they were informed
about the workings of the school and encouraged to help their children
to engage with their studies at home.

The study finds significant benefits for the
classes allocated to the program. Truancy rates fell, as did the number
of sanctions for bad behavior, but there is not much evidence for any
improvement in cognitive skills. Nevertheless, the positive effects
found on noncognitive skills are important, as children's later outcomes
are likely to be strongly influenced by them. Interestingly, the study
also finds spillover effects of the program to children in treatment
classes whose parents did not attend meetings. This suggests that
increasing the human capital of a subset of parents may have positive
effects not just on their own children but also on their children's
classmates.

Policy implications of positive
intergenerational transmission

The estimated payback from successful
interventions in educational policy is greater if the focus is not only
on the generation or groups directly affected. But potentially complex
implications for social inequality depend on exactly whose education is
increased by an educational improvement or expansion.

For example, researchers found that the large
growth in higher education in Britain in the late 1980s and early 1990s
led to a much bigger increase in educational attainment for children
from better-off families than from poorer ones. Although it is still too
early to study the labor market outcomes of children of the affected
cohorts, it is reasonable to believe that a positive intergenerational
return to education will tend to increase rather than reduce earnings
inequality in the next generation. By contrast, increasing the length of
compulsory schooling has a disproportionate effect on children from
poorer families, and if their children in turn do better because of this
extra parental education, the effect should be to reduce overall social
inequality.

In considering educational policy
interventions, it is natural to compare their effects with those of
other policies that might achieve similar outcomes. For example,
governments could increase financial transfers to parents (for example,
through child benefit), which might improve child outcomes to the same
extent as policies that increase parental education. The economics
literature on the causal effects of parental income on child outcomes is
inconclusive, so it is difficult to compare these types of policy
quantitatively. The tax system also provides an avenue to redistribute
incomes, and there may be a trade-off in that educational policies that
reduce inequality in the next generation imply that a less progressive
tax system is required for any particular level of after-tax income
equality.

Limitations and gaps

There are still gaps in knowledge. Information is
limited on the specific returns to different types of schooling (primary,
secondary, college). Estimates are conflicting on the relative importance of
maternal and paternal education, an area that requires further study. And
little is known about the effects of expanding the educational system on
intergenerational mobility. More research is needed to identify whether an
intervention that increases schooling for a particular group is likely to
make outcomes of the next generation more or less equal.

Other gaps include the relative importance of
many mechanisms for the increased education of parents to improve child
outcomes. Nor is much known about how the costs and benefits of increasing
parental education compare with those of other policies that can improve
child outcomes.

Summary and policy advice

Better educated parents tend to invest more time
and money in their children, who obtain more education and are more
successful in the labor market. Economists find a causal effect of parental
education on child outcomes, but the magnitudes tend to be larger in
countries with a high earnings return to education and where investments in
child human capital are costly. Both maternal and paternal education matter.
The relative value of extra maternal education tends to be greater when
educational levels are low.

Government intervention is often justified on the
basis that less well-off people cannot afford the education they wish for
their children, or because education has benefits for society. Even if
intergenerational transmission is considered a private benefit by parents
(they choose the optimal level of education for their children and view the
benefits as confined to their own family), there may still be spillover
benefits to society if there are more able members in subsequent
generations—benefits that arise if the children of better educated parents
are more likely to be productive and contribute to society through, for
example, taxation. In this way, positive intergenerational returns
strengthen the case for government subsidy of education and for compulsory
schooling laws.

Interventions that encourage the educational
attainment of children from poorer families will reduce inequality in
current and future generations. Other interventions to increase parental
human capital (such as help with parenting skills) can target poorer and
less educated parents and be relatively inexpensive to implement. Therefore,
they are promising for public policy.

Acknowledgments

The author thanks two anonymous referees and the
IZA World of Labor editors for many helpful suggestions on earlier drafts.
Version 2 of the article introduces sections containing evidence from
pre-school and other sources of variation in parental education and new “Key
references” [3], [4], [6], [8], [14].

Competing interests

The IZA World of Labor project is committed to the IZA
Code of Conduct. The author declares to have observed the principles
outlined in the code.